Karl W. Miller Energy Links

Sunday, October 17, 2010

What Carl Icahn and Mr. Miller both realize is that there is something called "replacement cost" especially with long lead time infrastructure assets. When it comes to coal plants, it if virtually impossible to get the permits, financing and replacement cost numbers to line up. Therein lies the hidden value of Dynegy, the fact that they have assets that can't be replicated in today's market, especially the coal assets. Blackstone wants a "free option on the improvement in the US Economy and thus electricity demand without paying the premium for the "goodwill of non-replaceable assets" implicit in Dynegy's assets. They want to finance their free "call option" w/sale agreement with NRG Icahn takes Dynegy stake, criticizes Blackstone - MarketWatch